Skills Australia chair Phil Bullock wasn’t happy, in a friendly sort of way, when I suggested that his organisation was a central planning agency (this was at a seminar to discuss the papers that ended up in this publication).
In their recent paper on ‘market design’, they deny that they favour central planning:
It is important to emphasise that Skills Australia does not advocate a ‘central planning agency’ approach based on detailed forecasting of skills.
It’s true that they don’t advocate the kind of micro-level central student place allocations we’ve sometimes seen in higher education. But Skills Australia does want what they call a ‘managed market’, in which governments purchase student places to align them with ‘community and industry needs’.
But I’m not sure that they have really thought enough about how this works in practice. With the central planner’s mindset, they want to shape student behaviour largely by restricting options:
Governments would continue to exercise control over individual choice by limiting
funding for certain programs, putting in place restrictions such as caps or eligibility criteria or allocating funding for specific training places or institutions to encourage take up.
The problem here is that the central planners don’t have the coercive or monopoly powers needed to make this work.
Nobody can make a student do a course. This isn’t like school where compulsory education, or the need to complete year 12 to open other opportunities, forces young people to choose from within the state curriculum.
And contrary to an implicit assumption behind this exercise of choice-limiting ‘control’, students have plenty of substitutes for the central planner’s desired options.
There are numerous other possible courses within the TAFE system. There is a large private vocational education sector. Some vocational education students have the marks to do university courses instead. Or there is employment. The pool of potential students has multiple leaks.
The vocational education demand data is very limited, but Victorian statistics on TAFE diploma courses shows that 40% of applicants reject their offers. So even among people with enough interest in a course to put it on their preference list in the end decide on something else.
And of course it is one thing to get a student to enrol in a course, and quite another to get them to finish it. Many TAFE courses have very low completion rates. There is a legitimate debate about how badly this reflects on TAFEs, since students leave when they have the skills they want or when they get a job, but it highlights how hard it is to use choice constraint as a skills steering tool. People who enrol because they had no better choices at the time will leave if a better choice emerges during the course.
Given the situation of Australia’s vocational education central planners, in which they have only partial control on the supply side and almost no control on the demand side, they need to look at approaches based on persuading students, not on commanding suppliers.